Articles Tagged With: Fair Housing Act

April 8, 2013

FHA Loan Answers: Applying For A Loan After A Short Sale

Home owners who need to ask about FHA loans after a short sale send us a good many of our most frequently asked questions. What do FHA loan rules say about borrowers trying to apply for a new FHA mortgage after a short sale transaction? According to HUD 4155.1 Chapter Four, “A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to • take advantage of declining market conditions, and • purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.” But that does NOT mean borrowers cannot apply for an FHA loan after a short sale–if you do not fit into the description above, and were | more...

April 5, 2013

Can A Family Have More Than One FHA Loan?

By Joe Wallace

A reader asks, “Is it true that married couple can only have one FHA loan?” The answer to this question depends on several different factors. What do the FHA loan rules say about having more than one FHA mortgage? If the married couple are obligated together on an FHA loan, there is generally no way to apply for a new FHA loan because of the residency requirement for the home purchased with an FHA mortgage. The rules in this area can be found in HUD 4155.1 Chapter Four, which says “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was | more...

April 4, 2013

FHA Loan Rules For Loan Documentation

By Joe Wallace

FHA loans require paperwork. Whether it’s filled out on line, on paper, or using some combination of the two, there are several ares where borrower and lender must work together to complete. You’ll notice when filling out your FHA loan paperwork that there are requirements for certain types of information including credit history, your monthly financial obligations and much more. But did you know there are rules that govern how this information is handled by the lender? For example, one of the most important rules designed for the protection of the borrower applies to how the lender collects your signature and authorization for various steps of the FHA loan or refinance loan application process. The FHA loan rules spelled out in HUD 4155.1 state: “Lenders may not have borrowers sign | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

April 1, 2013

FHA Condo Loans: What Defines A Condo?

By Joe Wallace

There are many different types of property you can buy with an FHA mortgage. Some borrowers are interested in suburban homes, others want a condo unit within the city. FHA loans do permit borrowers to buy condominium units with an FHA guaranteed mortgage, but there are additional rules for these purchases. One of the first things a borrower learns about purchasing a condo unit with an FHA mortgage is the rule found in HUD 4155.1 Chapter Four, Section B. It says, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured.” Discuss this requirement with your loan officer to learn more about the FHA approval process and how it works in cases where the condo isn’t currently on the “approved” list. The approval issue | more...

March 28, 2013

FHA Streamline Refinance Loans: Rules You Should Know

By Joe Wallace

FHA streamline refinance loans allow a borrower who has an existing FHA mortgage to refinance with no FHA-required credit check or FHA-required appraisal. FHA streamline loans work on the concept that the borrower has already qualified for the original FHA loan, so that qualifying data is used to get the home owner into the streamline refinance loan. These loans have certain rules that apply which don’t necessarily apply to other types of refinancing. For example, the purpose of the loan can come under scrutiny–the borrower must, in most cases, get a reduced mortgage payment or interest rate as a result of the new loan. Additionally, FHA loan rules state: “A transaction for the purpose of reducing the mortgage term must be underwritten and closed as a rate and term | more...

March 21, 2013

FHA Loan Answers: Child Support and Debt-To-Income Ratios

By Joe Wallace

A reader asks, “What about Child Support? My mortgage broker said that if it doesn’t come up on credit report it will not count as a deduction. However it does reflect on my paycheck every 2 weeks. My question is this considered a voluntary deduction at that point or was I misinformed?” FHA loan rules require a borrower’s debt-to-income ratio to be within certain limits in order to qualify for an FHA home loan, and while it’s true that FHA rules do take compensating factors into account, the amount the borrower is obligated to pay every month before the mortgage amount is important. What do the rules say about debt such as child support, alimony, etc.? The FHA official site says, “Most recurring obligations, including child support and alimony are | more...

March 11, 2013

FHA Loan Reader Questions: Closing The Deal

By Joe Wallace

A reader asks, “My mom applied for a FHA loan, went through the loan application and was approved. She signed with a builder and they built the house on her property. Two days before closing, the mortgage lending company informs her that she cannot close on her finished house, due to her not having a credit score when they re-ran her credit file.” “When she was approved she had a credit score. What can be done, her house is built on her property and yet to move in, meanwhile the builder has chose another lending company, and she to repeat whole process over, can the first lending company do this?” There’s no way to judge what has happened in a situation like this–there isn’t enough information AND there may be | more...

March 8, 2013

FHA Loan Answers: Using A Power of Attorney on FHA Mortgages

By Joe Wallace

Some borrowers are confused or have conflicting information about the ability to use a power of attorney on someone else’s behalf to initiate or continue the FHA mortgage loan application process. What are the FHA loan rules for this procedure? The FHA loan rulebook, HUD 4155.1, Chapter One, states the following: “The initial mortgage loan application may not be executed by using a power of attorney”. That would SEEM to be the FHA’s last word on the matter, but there are exceptions to this rule, which is where some of the confusion may occur. Please note that the rule states the INITIAL application may not be executed via power or attorney but does not necessarily prohibit one from being continued in such a manner. FHA loans do permit military members | more...

March 1, 2013

FHA Loan Reader Questions: First Time Homebuyer Requirement?

By Joe Wallace

A reader asks, “I’m not a first time home buyer, I have a conventional loan for a home that I’m planning to keep as a rental home. Can I qualify for a purchase FHA loan on a primary home?” One of the common misconceptions about FHA home loans is that you MUST be a first-time home buyer in order to qualify for one. This is not true. You may have state or local homebuyer assistance programs in your area that do require the applicant for that program to be a first time buyer, but FHA loans are open to all qualified applicants. The real issue in this reader question has more to do with debt-to-income ratios (DTIs)–will the FHA lender approve a buyer who already owns a home? Single-family new | more...